Power prices

5:33 pm

Mon May 7, 2012

McGinn defends City Light plan to raise utility's rates

Power lines on Seattle's Beacon Hill still carry some of the cheapest electricity in the country, but rate hikes are likely over the next 6 years, as proposed in a new strategic plan.

Photo by Andrew Imanaka flickr

The tendency for politicians to put off rate increases has meant decades of instability for customers of Seattle City Light. That’s according to Seattle Mayor Mike McGinn, who has unveiled a new strategic plan, which would raise electricity rates a total of 28 percent over the next six years.

Businesses want stability

Though raising rates is unpopular, McGinn says the plan will create more predictability for customers – something that’s especially important for businesses.

With hikes of about 4-point-7 percent every year for the next six years, City Light would be able to build up its reserve funds, invest in new technologies and repair or replace aging infrastructure. This includes building a new substation for the first time in 30 years. It will cost about $200 million dollars and will be located in the growing South Lake Union neighborhood. But McGinn says it’s not just for the many high tech employers located there.

“Electricity doesn’t just go to one neighborhood and stay there," McGinn said. "Reliability requires a system and the substations are really critical to route and balance the energy load over the city. So we have a growing city and we just can’t keep going with the number of substations we have.”

McGinn says there is increased demand coming from the South Lake Union neighborhood, but the businesses there also generate jobs and tax revenue for the city. The news conference was held at the relatively new headquarters of the Fred Hutchison Cancer Research Center, where much depends on reliable power supplies; the new headquarters of the ever-expanding Amazon.com are also located nearby.

Seattle rates would still compete

As for concerns that businesses might be driven away by the rate hikes, Seattle City Light Superintendant Jorge Carrasco says even with the increases, Seattle’s rates will remain competitive because right now they are among the lowest in the country. And he says neighboring utilities will be raising their rates too.

“So we’re expecting, even with the rate changes that are embedded in the plan, that by 2018, Seattle City Light rates will continue to be among the most competitive in the country,” Carrasco said.

For the average homeowner, the proposed increases would likely amount to about $35 per year; for a big industrial customer such as a steel mill it could be upwards of $600-thousand annually. The utility says it hopes to lessen the blow for those kinds of customers by working with them on increasing their efficiency. And they're working on help for low-income customers who would face hardship because of the increases.

The plan was developed by an 8-member advisory committee of customers that met 32 times and spent hundreds of hours poring over City Light’s books. It now goes to Seattle’s City Council, which will hold public hearings before setting new electricity rates in October.